Friday, March 26, 2010

I must concede that I am not a particular fan of the health care legislation that was passed recently. Personally, I do not think that it really does anything to address the real problems of health care sector. It make some small attempts to address cost by funding comparative effectiveness research. However, given the controversy surrounding the mammogram research, I don't think that comparative effectiveness research will really have any effect on health care spending. For the most part, the legislation mostly shifts costs around in the hopes of increasing health insurance coverage. For example, the community rating, mandatory issuance and individual mandate only shifts costs from the sick to the healthy. In addition the federal payments to low income individuals health care shifts health care costs from low income people to tax payers (the top 50% of income earners). In fact, these cost shifts hide the market signals that prices provide even further, which I think will make health care costs to rise even faster.

If you read any blogs, you know that everyone is writing on what they think will happen because of the current law changes. I too am fairly confident that I know that is going to happen because of this legislation. In fact I am confident enough to bet on the subject. Here is what I propose: I will make a $100 bet with the first individual that contacts me that the following will occur:

1. Heath care costs will continue to rise faster than overall inflation (using the C-CPI for the United States.

2. Because of this continued rise in the cost of health care, health insurance companies will continued to be blamed for health care costs and new calls will be made for creating a public insurance option before 2020.

3. A public insurance option will be created before, or during, 2020.

This is just a basic set of stipulations. If you are interested in developing this further and setting up a bet, feel free to contact me at: mcnay767@hotmail.com.

Sunday, March 21, 2010

If you read just about any report on sustainable living, or public transportation advocates, you will most defiantly hear the argument that mass transit should be promoted, and subsidized, because it is more cost efficient, relative to automobiles. While I may question the analysis of many of these reports, lets give them the benefit of the doubt on this matter. So, let assume that mass transit is less costly that using private automobiles. Does this mean that there is a market failure, and public action is needed to promote mass transit? Of course not. Lets make an analogy to determine why this is the case. It is less costly to own and operate a bicycle, relative to a motorcycle. In addition, the two serve the same basic purpose. So why do people use motorcycle instead of bicycles. the answer, of course, is the motorcycle provides some benefits that bicycles do not. Speed, comfort, pleasure are all possible benefits. We also know that these benefits must outweigh the added costs that the motorcycle provides. The same holds for personal cars, relative to mass transit. This is one of the many reasons why I feel that many of the arguments for "sustainable living" and mass transit are particularly weak.